ALBO WACC - Weighted Average Cost of Capital
The WACC of Albireo Pharma Inc (ALBO) is 7.0%.
| Range | Selected | |
| Cost of equity | 6.3% - 7.9% | 7.1% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.2% - 7.8% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.52 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 7.9% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.2% | 7.8% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ALBO | Albireo Pharma Inc | 0.01 | 0.81 | 0.8 |
| ABBV | Abbvie Inc | 0.21 | 0.34 | 0.29 |
| AMGN | Amgen Inc | 0.4 | 0.4 | 0.31 |
| ARDX | Ardelyx Inc | 0.17 | 0.31 | 0.28 |
| DTIL | Precision BioSciences Inc | 0.47 | 0.24 | 0.18 |
| EVLO | Evelo Biosciences Inc | 4593.63 | -0.4 | 0 |
| GILD | Gilead Sciences Inc | 0.19 | 0.34 | 0.3 |
| MIRM | Mirum Pharmaceuticals Inc | 0.12 | 0.67 | 0.62 |
| MREO | Mereo BioPharma Group plc | 0.02 | 0.91 | 0.89 |
| 950220.KQ | Neoimmunetech Inc (Pre-reincorporation) | 0.01 | 0.08 | 0.08 |
| Low | High | |
| Unlevered beta | 0.29 | 0.3 |
| Relevered beta | 0.28 | 0.3 |
| Adjusted relevered beta | 0.52 | 0.53 |
ALBO's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for ALBO:
cost_of_equity (7.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.52) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.